Lawsuit filed in alleged funeral scam

Tuesday

Jun 24, 2008 at 12:01 AM

The Missouri Attorney General's investigation of alleged inappropriate business practices by National Prearranged Services, one of the largest sellers of prearranged funeral services in the U.S., has culminated in a lawsuit, but NPS isn't named as one of the defendants.

Chris Houston

The Missouri Attorney General's investigation of alleged inappropriate business practices by National Prearranged Services, one of the largest sellers of prearranged funeral services in the U.S., has culminated in a lawsuit, but NPS isn't named as one of the defendants.

Although Attorney General Jay Nixon's investigation hinged on the results of an audit of NPS he had asked the Missouri Department of Insurance, Financial Institutions and Professional Registration to perform, NPS isn't one of the five entities named.

The difficulties associated with suing NPS directly could have arisen for a couple of reasons, the most prominent being the convoluted labyrinth of business associations that investigators are only beginning to unravel.

Nixon's lawsuit itself acknowledges that the five entities named as targets of the civil litigation — Mason Securities, Forever Network Inc., Mount Washington Forever LLC, MWC Properties Inc., and Forever Oak Hill Inc. — were "part of a structure that is so intertwined, intermeshed, and intermingled that it is virtually impossible to separate the records, conduct, and management of the various entities."

According to Nixon, four of the defendants are "registered pre-need providers and served as agents of Mason Security Association in selling pre-need funeral plans in Missouri. The four operate licensed funeral establishments in Missouri.

Another difficulty associated with suing NPS directly stems from a recent injunction issued by a Texas court that bars anyone from seizing the assets of NPS or filing suit against it to recover damages. Although the Linn County Leader contacted the Missouri Attorney General's Office to determine whether the Texas injunction had precluded Nixon from naming NPS in his lawsuit, there was no response.

Todd Frankel with the St. Louis Post-Dispatch explains that in the 1990s when NPS began using life insurance policies to pay the expenses of funerals when they came due, Nixon objected. The Attorney General didn't like the practice because "the value of the insurance policies was not guaranteed."

In 1992, Nixon filed suit against NPS, which was ultimately settled out of court with a compromise: NPS agreed to set aside funds to financially support the trust that by law was supposed to be funded with 80 percent of the proceeds from prearranged funeral plan sales; outside oversight of NPS would, in turn, be maintained until 2000, although NPS would be allowed to continue using the death benefits from life insurance policies to pay for funerals.

According to Frankel, NPS owners Brent and Tyler Cassity had developed an empire with a unique funding structure: "The Cassitys owned not just NPS, which marketed the product; they owned the life insurers that wrote the policies. In Missouri, NPS was the policy beneficiary, too, which is unusual. When clients bought prepaid burials, they paid NPS, which took out the insurance, paid the policy premiums and collected when they died."

Unfortunately, according to a federal lawsuit filed against NPS by Hannover Life Reinsurance, "NPS purchased whole-life insurance policies to fund prepaid burials, named itself beneficiary, then let the policies lapse and replaced the whole-life policies with cheaper term-life insurance."

It will be months before the whole intricate scheme is fully understood by investigators, but funeral home owners throughout northern Missouri are already organizing to find a way to survive while making good on all the prepaid funeral plans they sold through NPS.

Officers of that budding organization have been contacted but have declined to comment.